You borrow $149,000 to buy a house. The mortgage rate is 7.5 percent and the loan period is 30 years. Payments are made monthly. If you pay for the house according to the loan agreement, how much total interest will you pay?

let the payment be P

i = .075/12 = .00625
n = 12(30) = 360

P( 1 - 1.00625^-360)/.00625 = 149000
P = 1041.83

So interest = 1041.83(360) - 149000
= $226058.66

(the calculation of total interest paid is really not a realistic actuarial calculation, since we are ignoring the fact that the monies were calculated form different time spots, and since "time is money" , we are ignoring that critical fact by simply multiplying the payment times 360)

Well, well, well, looks like you've found yourself in a housing pickle! Let's crunch some numbers and find out just how ferocious that interest can be.

First, we need to determine your monthly mortgage payment. To do that, we'll use the magical formula known as the mortgage payment formula. It goes a little something like this:

Payment = P * (r(1+r)^n)/((1+r)^n - 1)

Where P is the principal amount (in this case $149,000), r is the monthly interest rate (7.5% divided by 12), and n is the number of payments (30 years multiplied by 12 months).

Once we plug the numbers into this equation and do some mathematical magic, we find that your monthly mortgage payment will be approximately $1,043.20.

Now, let's see how much total interest you'll end up shelling out over the span of those 30 years. Multiplied by 12 and then multiplied by 30, your total mortgage payments amount to a whopping $375,552.

Minus the original principal amount of $149,000, we find that you'll be dishing out approximately $226,552 in interest alone!

Ah, the joys of homeownership, where money seems to evaporate as quickly as a magic trick. But hey, at least you'll have a roof over your head to hide from any overly critical audience members.

To calculate the total interest paid on a mortgage, we need to use the formula for calculating monthly mortgage payments:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]

Where:
M = Monthly mortgage payment
P = Principal loan amount
i = Monthly interest rate (annual interest rate divided by 12)
n = Total number of months (loan period in years multiplied by 12)

First, let's calculate the monthly interest rate:

Monthly interest rate = 7.5% / 12 = 0.075 / 12 = 0.00625

Next, we'll calculate the total number of months:

Total number of months = 30 years * 12 months = 360 months

Now, we can plug the values into the formula to calculate the monthly mortgage payment:

M = 149,000 [ 0.00625(1 + 0.00625)^360 ] / [ (1 + 0.00625)^360 – 1 ]

Using a calculator, the monthly mortgage payment comes out to be approximately $1,043.29 per month.

To calculate the total interest paid over the loan period, we subtract the principal loan amount from the total amount paid:

Total interest paid = (Monthly mortgage payment * Total number of months) - Principal loan amount

Total interest paid = ($1,043.29 * 360) - $149,000

Using a calculator, the total interest paid comes out to be approximately $203,584.40.

So, if you pay for the house according to the loan agreement, you will pay a total of approximately $203,584.40 in interest.

To find the total interest paid on a mortgage, you'll need to use the formula for calculating the monthly mortgage payment and then determine the total amount paid over the loan period.

The formula to calculate the monthly mortgage payment is:
M = P [i(1 + i)^n] / [(1 + i)^n - 1]

Where:
M = Monthly mortgage payment
P = Principal amount (loan amount)
i = Monthly interest rate (annual interest rate divided by 12)
n = Total number of payments (loan period in years multiplied by 12)

Let's calculate the values step by step:

Loan amount (P) = $149,000
Annual interest rate = 7.5% = 0.075 (in decimal)
Monthly interest rate (i) = 0.075 / 12 = 0.00625
Loan period (n) = 30 years
Total number of payments = 30 x 12 = 360

Now, we can plug in these values into the formula:

M = 149000 [0.00625(1 + 0.00625)^360] / [(1 + 0.00625)^360 - 1]

Calculating this equation will give you the monthly mortgage payment. However, we are interested in finding the total interest paid over the loan period.

Total interest paid = (M x n) - P

So, you can multiply the monthly mortgage payment (M) by the total number of payments (n), and then subtract the principal amount (P) to find the total interest paid.

Note: The monthly mortgage payment will include both principal and interest portions, and as you keep paying off the loan, the proportion of interest decreases while the proportion of principal increases.

Using this approach, you can calculate the total interest paid on the mortgage.

wondering what the difference is between future value, and present value, isn't that interest?